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Tuesday, 10 February 15
IRON ORE MARKET TO REMAIN OVERSUPPLIED IN 2015: PRICE FORECAST $70/T - WOOD MACKENZIE
 COALspot.com: With January witnessing the price of iron ore falling to its lowest levels since May 2009, Roger Emslie, Principal Metals & Mining Consultant for Wood Mackenzie says there is little to suggest the picture is likely to pick up in 2015 with demand set to remain "slower not lower" and therefore prices will remain low for longer.
Addressing delegates at the Mining Indaba conference in Cape Town, Mr Emslie asserts; "It’s hard to believe, but 2015 has started even worse than 2014 finished. Having commenced January just above US$70 a tonne , the TSI 62% Index was trading at US$62/t by the close of the month resulting in a monthly average of US$67/t CFR – its lowest since May 2009."
According to Wood Mackenzie's iron ore market outlook, demand is unlikely to show any meaningful improvement until late Q1 or early Q2 due to a combination of seasonal and cyclical reasons. Mr Emslie adds: "We have lowered our Q1-15 price forecast to US$67/t CFR and our CY-15 price to US$70/t CFR (basis 62% Fe sinter fines)."
Explaining Wood Mackenzie's short-term outlook in more detail Mr Emslie says: "Iron ore prices may be languishing at their lowest level for nearly six years, but it remains difficult to make a positive case for prices in the short term. Chinese steel mills have cut production in recent weeks due to a combination of weak demand and planned maintenance and this is feeding through directly to iron ore requirements. With the Lunar New Year holidays just a few weeks away Chinese steel production will get worse before it gets better. Steel mills will not re-stock in a falling or stagnant market and when they do there should be plenty of slack in the system, as shown by the high level of inventory held at Chinese mines.
Outside of China the picture is similarly uninspiring due to a combination of seasonal and structural factors. Other than the Middle East and India none of the major iron ore importers have shown any meaningful improvement in demand, a situation that is unlikely to change in the short term."
"The outlook for Q2 is marginally better: Chinese mills should start re-stocking post Lunar New Year, driven by seasonally stronger domestic demand and a pick-up in exports of steel products. This should coincide with slightly tighter seaborne supply as Australian exports reach a temporary plateau and high cost suppliers elsewhere remain out of the market."
Wood Mackenzie warns that if the iron ore price remains in the low $60/t range then more closures from mid-tier producers seem likely and more asset write-downs are a near certainty: "As recent announcements show, there’s only so far that cost cutting can go before difficult decisions need to be taken concerning the long term viability of a mine in a structurally oversupplied market," Mr Emslie adds.
So what led to the collapse in prices? "Australian exports surged ahead by approximately 140 million tonnes (Mt) in 2014 based on investment decisions made several years ago when prices were higher and the long term view was more bullish," says Mr Emslie, "As supply ramped up in 2014, Chinese steel demand did the unthinkable and contracted for the year creating a clear disconnect between supply and demand, marking a decisive turning point for iron ore."
On Chinese imports, which crucially account for 66% of the global total, Mr Emslie says: "2014 finished on a high for Chinese imports (in volume terms not value) with China importing a record 86.9Mt in December." The total value of Chinese imports (in US dollar terms) fell in 2014, despite the volume rising by over 100Mt. Mr Emslie explains; "China’s import bill for iron ore peaked at $112 billion in 2011 (when iron ore prices averaged $168/t) but have subsequently fallen by 16% to $95 billion in 2014. China should see another significant drop in its iron ore import bill in 2015 as significantly lower prices and freight costs more than offset higher volume. We currently forecast a 30Mt rise in Chinese imports of iron ore this year with strong growth in Australian shipments partially offset by price related cutbacks elsewhere."
Pointing to more recent to iron ore news from Australia in January Mr Emslie comments on the impact of sustained oversupply; "The series of announcements and data we've seen provides further evidence of the widening gap between the major miners and the rest of the supply chain. Fourth quarter production reports from Rio Tinto, BHP Billiton and FMG confirm that their low cost expansions are progressing well, paving the way for even higher output in 2015/16." Mr Emslie concludes; "The strong performance of the majors comes at the expense of relatively high cost mid-tier suppliers who are scaling back investment and cutting production in response to low prices and compressed margins."
Iron ore in numbers:
- Iron ore price forecast for Q1 2015 is $67/t CFR.For CY 2015 $70/t CFR (basis 62% Fe sinter fines)
- Global iron ore production 2201 million tonnes (2014)
- Global imports 1404 million tonnes (2014)
- Chinese imports 930 million tonnes (2014)
About Wood Mackenzie
Wood Mackenzie is a global leader in commercial intelligence for the energy, metals and mining industries. We provide objective analysis and advice on assets, companies and markets, giving clients the insights they need to make better strategic decisions.
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Tuesday, 24 February 15
IHS ENERGY COAL CONFERENCE OF THE AMERICAS
Attend the IHS Energy Coal Conference of the Americas 17-19 March in Cartagena, Colombia and learn about timely concerns in today's coal indust ...
Monday, 23 February 15
Q2' CFR SOUTH CHINA COAL SWAP FOR Q2 ROSE 3.39% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery rose US$ 1.90 (+3.39%) per MT month over month and declined US$ 0.08 ...
Monday, 23 February 15
Q2' API 5 FOB NEWCASTLE COAL SWAP CLOSED $1 HIGHER THAN Q3
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 3.12 per MT (+6.44%) month over month and fall US$ 0.43 (-0.83%) w ...
Sunday, 22 February 15
THE BALTIC DRY INDEX LOST ALMOST 3.2% OR 17 POINTS WEEK ON WEEK
COALspot.com: The Baltic Dry Index, one of the economic indicators that monitors the health of the world's economy by tracking the price of shi ...
Friday, 20 February 15
GOVT SET TO INCREASE COAL OUTPUT TARGET THIS YEAR - JAKARTA POST
The Energy and Mineral Resources Ministry is planning to increase its coal output target this year as the government seeks to offset the ongoing de ...
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- Port Waratah Coal Services - Australia
- Sarangani Energy Corporation, Philippines
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- Central Electricity Authority - India
- Ministry of Mines - Canada
- ICICI Bank Limited - India
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Energy Development Corp, Philippines
- Latin American Coal - Colombia
- Makarim & Taira - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Aboitiz Power Corporation - Philippines
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- Thai Mozambique Logistica
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Independent Power Producers Association of India
- Commonwealth Bank - Australia
- Minerals Council of Australia
- Energy Link Ltd, New Zealand
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aditya Birla Group - India
- Sinarmas Energy and Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kartika Selabumi Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- Maharashtra Electricity Regulatory Commission - India
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- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- IEA Clean Coal Centre - UK
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kumho Petrochemical, South Korea
- Bukit Baiduri Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Wilmar Investment Holdings
- Kobexindo Tractors - Indoneisa
- Indonesian Coal Mining Association
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Electricity Authority, New Zealand
- Indogreen Group - Indonesia
- GAC Shipping (India) Pvt Ltd
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- MS Steel International - UAE
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- Formosa Plastics Group - Taiwan
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- Coal and Oil Company - UAE
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Karbindo Abesyapradhi - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Orica Australia Pty. Ltd.
- The State Trading Corporation of India Ltd
- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- McConnell Dowell - Australia
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bharathi Cement Corporation - India
- Chettinad Cement Corporation Ltd - India
- SMC Global Power, Philippines
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- Toyota Tsusho Corporation, Japan
- Straits Asia Resources Limited - Singapore
- Planning Commission, India
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Carbofer General Trading SA - India
- Tamil Nadu electricity Board
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- PowerSource Philippines DevCo
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- Chamber of Mines of South Africa
- IHS Mccloskey Coal Group - USA
- Lanco Infratech Ltd - India
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Coalindo Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Intertek Mineral Services - Indonesia
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- Price Waterhouse Coopers - Russia
- Anglo American - United Kingdom
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Holcim Trading Pte Ltd - Singapore
- International Coal Ventures Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Economic Council, Georgia
- Sindya Power Generating Company Private Ltd
- Timah Investasi Mineral - Indoneisa
- Antam Resourcindo - Indonesia
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- Deloitte Consulting - India
- Grasim Industreis Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Ministry of Finance - Indonesia
- Billiton Holdings Pty Ltd - Australia
- PTC India Limited - India
- Singapore Mercantile Exchange
- Australian Coal Association
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Barasentosa Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- Rio Tinto Coal - Australia
- Goldman Sachs - Singapore
- White Energy Company Limited
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- Power Finance Corporation Ltd., India
- Riau Bara Harum - Indonesia
- Merrill Lynch Commodities Europe
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Altura Mining Limited, Indonesia
- Attock Cement Pakistan Limited
- India Bulls Power Limited - India
- Savvy Resources Ltd - HongKong
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